Reference no: EM133825167

Homework: Management of Innovation & Vertical Integration

Eni is Italy's largest and most profitable company. The case traces Eni's 50-year history from its founding as a state-owned oil and gas company, through its privatization and restructuring during the 1990s, to its growth and success under its present CEO, Vittorio Mincato. The case surveys the state of Eni during the early part of 2003 and considers some of the challenges facing Mr. Mincato as he seeks to sustain and continue Eni's outstanding financial and operating performance under a strategy of "disciplined growth" and "core business focus." The case deals with the analysis of corporate strategy for a large corporation. (By 2003, Eni was among the top-50 global corporations whether measured by sales or market capitalization.) Eni is vertically integrated, international, and diversified across several industrial sectors. The case requires students to identify and analyze the rationale behind Eni's current corporate strategy and make recommendations for how Eni should allocate its resources across its different vertical levels, business sectors, and geographical areas of operation in the future. A key challenge of the case is that Eni is currently performing exceptionally well. Hence, there is a tendency among many students to recommend "Keep up the good work, Mr. Mincato" without looking deeply at the company and its business. In fact, Eni faces a number of key challenges, which must be addressed if Eni's recent success is to be sustained.

This case is used to develop students' skills in the following:

1. Identifying, articulating, and analyzing a company's corporate strategy.

2. Analyzing the fit between a company's corporate strategy and (i) its external environment and (ii) its resources and capabilities

3. Combining quantitative, qualitative, and historical information to build a profile of a company's resources and capabilities.

4. Examining the structure, systems, and culture that an organization needs to support its corporate strategy.

A. What is Eni's corporate strategy?

B. Evaluate Eni's corporate strategy. How well aligned is Eni's strategy with (i) the characteristics and requirements of its industry environment and (ii) Eni's resources and capabilities?

C. Looking ahead over Eni's next four-year planning period (2004-7), what are the main issues that face the company? How should Eni allocate its resources across its different businesses and between different geographical areas? In particular: (i) Should Eni divest its chemicals business? What about its engineering, construction, and oilfield services subsidiaries? (ii) Should Eni seek to establish itself as a major supplier of electrical power? Should it invest in renewable energy sources (e.g. wind power)? (iii) What should Eni's international strategy be - especially in relation to its downstream businesses (Refining and Marketing; Gas and Power)?

D. What organizational changes should Mincato pioneer, especially with regard to organizational structure, management systems, and corporate culture?